The case for hedge funds in the throes of a crisis

Tom Kehoe of the Alternative Investment Management Association

Tom Kehoe of the Alternative Investment Management Association

Against the backdrop of financial markets across the world falling steeply in the wake of the Covid-19 pandemic, investors rushed to traditional safe havens in a bid to safeguard their investments

Comparing the current crisis to previous market corrections, it is worth recalling the collateral benefits of investing in hedge funds. A hedge fund constitutes an investment programme whereby the managers or partners seek absolute returns by exploiting investment opportunities, while protecting principal from potential financial loss. Hence, the first hedge fund was a hedged fund. As of the end of March, leading stock market indices lost in a range of between 13% -20% of their total value, with the MSCI World index (a popular equities proxy used to compare hedge fund performance) los...

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